Sponsored Locations Are Coming to Pokémon Go on a Cost-Per-Visit Basis

Retailers Will Have the Biggest Opportunity to Advertise

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Gamers play Pokemon Go on Fifth Avenue in New York on Wednesday.
Gamers play Pokemon Go on Fifth Avenue in New York on Wednesday. Credit: Victor J. Blue/Bloomberg

Advertisers are almost certainly wondering what the opportunities are for advertising with Pokémon Go. The exact number of active users hasn't been officially released, but the game has in just a week become a cultural phenomenon, and that's when it's still only available in the U.S., Australia and New Zealand. According to SimilarWeb, 5.9% of all U.S. Android users opened the app on Monday.

Soon enough, marketers will be able to target those people through sponsored locations within the wildly popular mobile game. Niantic, the game's developer and a spin off of Google, said earlier in the week that it would offer advertisers sponsored locations down the road, a move that will especially appeal to retailers, but few details were given.

On Wednesday, Niantic CEO John Hanke told the Financial Times that sponsored locations may come sooner rather than later. Pokemon's first component to its business is in-app purchases, but Mr. Hanke told the FT:

Alongside in-app payments, "there is a second component to our business model at Niantic, which is this concept of sponsored locations", Mr Hanke said, where companies "pay us to be locations within the virtual game board — the premise being that it is an inducement that drives foot traffic".

Advertisers are charged on a "cost per visit" basis, similar to the "cost per click" used in Google's search advertising, he said.

Mr. Hanke didn't provide much additional detail, and it wasn't clear when the sponsored locations would arrive. Niantic did not respond to Ad Age's requests for comment about advertising in the game.

Pokémon Go is free to download but Niantic makes money by in-app purchases, which can help players advance in the game more quickly. For sale separately is a wearable that alerts people to nearby Pokemon, even when they're not actively playing on their phones.

Niantic and The Pokémon Company International, which oversees the Pokémon brand in the West, handle development and day-to-day operations of the game. Nintendo is manufacturing the wearable, Pokémon Go Plus, and is also an investor.

By all accounts, the game has been very successful. App Annie estimates that it has made well over $1 million in net revenue per day, after developers' 30% cut to Apple and Google. For Nintendo, the game has sent its shares soaring about 50%.

Whether game players will respond well to sponsored locations like "Pokéstops" and "gyms," which are real-world places where players can spot and train Pokémon characters, remains to be seen.

Niantic's predecessor game, Ingress, which like Pokémon is based off of mapping technology and augmented reality, also had some sponsored locations, but it isn't clear how well received they were or how much revenue they generated.

Some retailers and local businesses have already found ways to use the game to attract people to their stores using "lures," which can be bought in the game to attract Pokémon characters to specific locations. The more Pokémon there are hanging around a Pokéstop or gym, the more likely there are to be players nearby.

What big marketers might jump in first isn't clear, but Gawker's Gizmodo site reported that McDonald's may be among the first, based on an analysis of the game's code. McDonald's has not confirmed that to Gizmodo, and did not respond to a request for comment from Ad Age.

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